Focused on Building Brands

It’s Time to Change Marketing’s Image

As marketers we are all involved with building our brands image with others be they consumers, customers, vendors, employees or other stakeholders but why is it that we have done such a poor job of building our profession’s image?

This was driven home for me in the recent past by the following incidents:

A senior purchasing/procurement manager said to me that “marketers do nothing but sit in their ivory towers and build plans that go nowhere. It is guys like me and the sales people that bring the reality of the situation to bear for Senior Management.”

Another colleague told me of a presentation made by the head of his company’s HR Department presenting his rationale as to why he should take over as the Chief Marketing Officer of the company. In essence his argument was he understood human relations and as such would be ideally suited to understand what motivates consumers to buy the company’s brands. The CEO actually gave it serious consideration before deciding to combine the Marketing and Sales role into one with a VP of Sales and Marketing headed up by the former VP of Sales.

I saw a statistic that said only 14% of CEO’s in Fortune 500 companies in North America had come from a marketing background. Most had either a Finance (number 1) or Sales background. This is a far cry from 25 years or more ago when the majority of corporate leaders came from Marketing and Marketing was seen as the area of leadership in the company, at least as far as packaged goods was concerned.

So how has it come to this? First of all in my opinion despite the fact we are all supposed to be great communicators we have failed to communicate what Marketing is and what we as Marketers do, particularly in regard to Brand Marketing. In a lot of cases we have allowed others to define Marketing for us and have failed to delineate reasonable expectations for Marketing plans and programs.

One example is the change several of years ago by the Direct Marketing Association to the Canadian Marketing Association. Now I have nothing against direct mail/response but it is not Marketing! It is a useful tool in the marketing mix but it is not the be all and end all. Yet when the Direct Marketing Association made this change to the best of my knowledge no marketer stood up and objected, including me. One needs to look no further today than the agenda for their AGM to see how the association now pays lip service to any topic beyond direct response which leaves the impression with outsiders that only direct response is Marketing.

We have also failed to communicate the need for long term brand building by a company. The net result is one of the first things to go in any budget review are consumer brand building items; advertising, consumer promotion, sponsorship, PR etc in favour of short term volume building items such as price discounts. In addition we have seen the shift away from consumer programs to trade directed programs. In fact it is often cited that now over 80% of a CPG brand’s marketing budget is directed towards trade marketing programs and it is continuing to grow. As a result you see brand awareness, repeat purchase and loyalty all declining along with the price gap between private label/store brands and national brands.

One of the biggest problems in trying to convince management to go for brand building programs is the fact they seldom payback in a very short time. In an environment where management’s perspective of the short term is 3 months (the next fiscal quarter) and the long term is a year there is tremendous pressure to deliver a payback in less than a year. I find this strange in that if it was a capital expenditure such as new plant or even a new piece of equipment management would be looking at a 3 to 5 year payback on their investment but a marketing investment has to pay back in a year or less. I recently was involved in a relaunch of a brand with an extensive consumer marketing campaign incorporating new advertising, new social media, trial generation and experiential programs all designed to re-engage our core consumers with the brand. However 3 months after the launch the program was cut because Senior Management hadn’t seen a big sales increase. They therefore cut the program to fund price discounting instead to make their number for the year.

What we as Marketers need to do is better manage Senior Management’s expectations in terms of payback for marketing programs. A number of years ago I was responsible for Black Velvet Canadian Whisky on a worldwide basis and our most important market was the US where we did around 2.5 million cases a year in sales and generated an operating profit of more than $25 million US a year. We had a major consulting firm come in and do a detailed analysis of the brand by a bunch of very bright financial consultants. In one of their presentations they went through each element of our marketing mix and did a financial analysis that to them demonstrated that nothing paid back. Not our advertising, not our consumer promotion programs, not our big PR program, nothing except for price discounting. To which my first question was “If that is the case how did we get to 2.5 million cases and over $25 million operating profit per year – serendipity?” Their problem was they were looking for an immediate short term (less than a year) payback rather than looking at the long term success we had in brand building.

In summary we need to do a much better job in communicating how brands are built and what an appropriate time frame is for a payback. Back when I started in Brand Management with Unilever we looked at a loss in the test market and a Year 1 loss in the rollout of the test. We broke even in Year 2 and recovered all our losses and made a small profit in Year 3. That to me is a reasonable model but I also believe it is one that is seldom employed today in most companies. Additionally we used to run test programs on existing brands of heavy up expenditures in things like advertising or consumer promotion in a market to see if we could increase sales to the point they paid back for us. Normally this was a one to two year test program but when is the last time any of us have either undertaken such a test or heard of one being done?

In short we need to better communicate and better manage people’s expectations if we are to improve the image of Marketing in the coming years. Failure to do so will result in a continuing decline for both the image of Marketing and the value of the brands for which we are responsible.